By Brian Blackstone
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- The U.S. Federal Reserve's balance sheet retreated a bit last week after steady increases in recent months reflecting the myriad credit programs launched by the Fed in recent months to spur lending in credit markets.
Still, once a new Fed initiative to purchase mortgage-backed securities is fully reflected in the data, the size of the balance sheet should expand further.
Meanwhile, deposits held at the Fed by banks slid last week by around $14 billion to $846.1 billion, according to Thursday's weekly report from the Fed.
The Fed's balance sheet stood at $2.14 trillion Wednesday, down from close to $2.3 trillion the previous week.
However, economists think that figure will eventually climb toward $3 trillion when programs to support the agency and mortgage-backed securities markets are fully implemented. The balance sheet was under $900 billion at the end of 2007 and was still less than $1 trillion as recently as mid-September.
Meanwhile, borrowing through the Fed's discount window by commercial banks, known as primary credit, fell around $10 billion from last week and stood at $83.68 billion Wednesday. Average daily borrowing was little changed at $87.94 billion.
Lending through the Fed's primary dealer credit facility, created in March for investment banks following the collapse of Bear Stearns, fell to $34.33 billion on Wednesday from $37.4 billion the previous week.
When other loans and liquidity programs are included, Fed lending totaled about $178.28 billion on Wednesday, down about $15 billion from the previous week.
Once one of the more secondary of Fed reports, the weekly balance sheet data have taken on heightened importance as Fed policy enters a new phase where credit programs replace the fed funds rate as the central bank's main tool.
Last month, the Fed slashed the fed funds target to a record-low range near zero. In a statement, officials signaled their focus will be on the Fed's balance-sheet to stimulate the economy.
As of Wednesday, the Fed provided $21.14 billion in credit through the Federal Reserve Bank of Boston for an asset-backed commercial paper/money-market mutual fund liquidity facility. That was down more than $2 billion from the previous week.
There was little change in net portfolio holdings in connection with the Fed's commercial paper funding program, which stood at $334.1 billion on Wednesday. Purchases under the program started Oct. 27, allowing companies to sell their three-month commercial paper to the Fed.
The U.S. commercial paper market rose sharply last week, by $83.1 billion, and the fact that Fed purchases were largely steady suggests private-sector activity may be returning to that sector.
-By Brian Blackstone; Dow Jones Newswires; 202-828-3397; brian.blackstone@dowjones.com
(Meena Thiruvengadam contributed to this article)
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Publié le 08 janvier 2009 Copyright © 2009 Dowjones